Correlation Between Avient Corp and Nabors Industries

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Can any of the company-specific risk be diversified away by investing in both Avient Corp and Nabors Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Avient Corp and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and Nabors Industries, you can compare the effects of market volatilities on Avient Corp and Nabors Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Avient Corp with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Nabors Industries.

Diversification Opportunities for Avient Corp and Nabors Industries

AvientNaborsDiversified AwayAvientNaborsDiversified Away100%
0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Avient and Nabors is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Avient Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Avient Corp are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Avient Corp i.e., Avient Corp and Nabors Industries go up and down completely randomly.

Pair Corralation between Avient Corp and Nabors Industries

Given the investment horizon of 90 days Avient Corp is expected to generate 0.59 times more return on investment than Nabors Industries. However, Avient Corp is 1.69 times less risky than Nabors Industries. It trades about -0.17 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.12 per unit of risk. If you would invest  4,866  in Avient Corp on October 7, 2024 and sell it today you would lose (937.00) from holding Avient Corp or give up 19.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Avient Corp  vs.  Nabors Industries

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15AVNT NBR
       Timeline  
Avient Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4042444648505254
Nabors Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5055606570758085

Avient Corp and Nabors Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.25-2.43-1.62-0.80.00.671.352.042.72 0.040.050.060.070.080.090.100.11
JavaScript chart by amCharts 3.21.15AVNT NBR
       Returns  

Pair Trading with Avient Corp and Nabors Industries

The main advantage of trading using opposite Avient Corp and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, Nabors Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nabors Industries will offset losses from the drop in Nabors Industries' long position.
The idea behind Avient Corp and Nabors Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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